First HoldCo Plc has formally shifted to a liberal dividend policy, committing to distribute a minimum of 60% of its annual post-tax profit to shareholders. The board of directors adopted the new measure at a meeting on Tuesday, with the decision unveiled in a regulatory filing on Thursday. This marks a decisive move to prioritise shareholder rewards over retaining earnings for internal expansion.
Policy Puts Shareholders First
Under the adopted policy, shareholders are guaranteed at least six out of every ten naira of post-tax profit generated each financial year. The banking group explained that the decision reflects the directors' strong confidence in the company's earnings capacity, improved capital base, better asset quality, diversified revenue streams, and a robust outlook for sustained profitability. It is a clear departure from the previous practice of ploughing back most profits into the business.
The move brings immediate relief to investors who endured the 2025 financial year without any dividend—a painful first in many years. That drought was triggered by a massive bad-loan loss provision that consumed funds that would otherwise have been distributed. The financial institution set aside ₦748.1 billion to cover problem loans on its books for 2025, following a directive from the Central Bank of Nigeria (CBN). The regulator, aligning with international best practices, ordered lenders to clear their balance sheets of toxic assets, including non-performing forbearance loans inherited from the Covid-19 era.
Why Profit Took a Nosedive
As a direct consequence of the huge provisioning, profit for the year tumbled to ₦147.3 billion, down sharply from ₦663.5 billion in the previous year. The 92% crash was a headline shock, but the group's leadership has consistently framed it as a necessary, strategic clean-up. "At First HoldCo, we decided to clean house properly. We took a huge one-time hit of ₦748 billion to admit old bad loans instead of pretending they do not exist," said Femi Otedola, the chairman of the banking group, in January. "That is why profit looks like it crashed by 92 per cent. A painful headline, but it is a serious long-term move."
The regulatory pressure did not affect only First HoldCo. Other major banks, including United Bank for Africa (UBA) and Access Holdings, were also held back from distributing dividends to shareholders for the 2025 financial year due to the same regulatory requirement to purge their books of non-performing loans.
Chairman Confident in Turnaround
In the Thursday statement announcing the dividend policy, Mr. Otedola underscored the transformation journey the group has undertaken. He said, "Over the last two years, we have undertaken difficult but necessary actions to strengthen governance, clean up the balance sheet, restore confidence, rebuild capital, and reposition the group for long-term growth. We are now beginning to see the benefits of those strategic decisions. As performance continues to improve across our businesses, it is only appropriate that our shareholders participate more directly in the value being created."
His comments signal that the board sees the worst as behind them. The new dividend policy is therefore both a reward for past patience and a bet on the group's capacity to generate consistent profits going forward.
Strong Interim Results Support Optimism
Forward-looking indicators already show momentum building. In the first half of 2026, First HoldCo reported a 16.7% increase in revenue, climbing to ₦1.9 trillion. Pre-tax profit surged to ₦653.5 billion, up from ₦356.1 billion in the corresponding period of 2025. After-tax profit likewise jumped to ₦526.3 billion, compared with ₦283.8 billion previously.
These figures suggest that the financial pain of the massive bad-loan write-off is beginning to fade, and the group's core businesses are generating stronger earnings. The decision to adopt a 60% dividend payout ratio aligns with global best practices for mature, well-capitalised financial institutions and signals to the market that First HoldCo's management is confident in the durability of its earnings and cash flow.
For investors, the policy provides clarity and predictability, making First HoldCo shares more attractive to income-focused portfolios. As the group continues to execute its turnaround strategy, the commitment to distribute a significant portion of profits could also help restore the market's trust in Nigerian banking stocks, which were rattled by the sector-wide dividend suspension.
